THE ULTIMATE GOAL OF THIS BLOG IS TO SHARE WITH THE READER ISSUES OF HISTORICAL AND CONTEMPORARY GLOBAL SIGNIFICANCE FROM A PROGRESSIVE PERSPECTIVE.
ORDER OF MOST READERS OF THIS BLOG: USA, RUSSIA, FRANCE, UNITED KINGDOM, GERMANY, UKRAINE,CANADA, INDIA,and CHINA.

Tuesday, 27 March 2012

Historically, during periods of economic contraction, the intelligentsia, politicians, business, academic, community and church leaders invariably try to steer the debate away from what has gone wrong with the political economy to the subject of values. This was certainly the case during the 19th century when the depressions of the 1840s, 1870s and 1890s took place. Well-meaning individuals as well as opportunistic propagandists questioned society's values, despite the fact that structural causes in the political economy accounted for the economic contraction and social ills.

A somewhat similar situation existed during the Great Depression of the 1930s when novelists, philosophers, politicians and others decried the values of the 1920s. There are similarities between those historical periods and the economic contraction and diminishing of the Western middle class that started during the Reagan-Thatcher era and continues to the present. The universal topic of values served its purpose when the Industrial Revolution was causing socioeconomic problems, and it serves its purpose today when Western Civilization is captive to banks and corporate capital that are concentrating capital while weakening the social fabric and democratic institutions.

The very elites suggesting to the masses redirection toward reexamination of values are the same ones that:
1. do not practice the values that they preach;
2. they are responsible for the widening socioeconomic gap and sociopolitical instability that ensues;
3. they benefit by deflecting the focus of the masses from the essential problem in the systemic flaws of the political economy to values.

Naturally, there is the salient question of the vast differences in value systems between societies and individuals; differences between religious and secular values within a pluralistic society, or the differences/nuances of values within a community whether it is predominantly religious or secular. That scholars, politicians, businesspeople. priests, and the laity have been concerned about western civilization’s decline is a story as old as Oswald Spengler who wrote about the topic after the German Empire lost the First World War and Europe as the world's global power center began to give ground to the US and USSR.

But are the values of Bismarck and his generation of imperialist politicians and business titans the ones that Spengler's generation lamented against the background of the Bolshevik Revolution and its global impact? Is it the Western values of imperialism, nationalism and militarism that led to global war in 1914 that were lost along with the decline of Western Europe? Spengler focused on Western decadence, but the question is one of the underlying assumptions of what constituted decadence and what constituted ascendancy, the degree to which humane and communitarian principles rested behind assumptions. Was it dreadful that imperialist Europe of the old elites began to decline as a result of militarist confrontation, or was it tragic that millions of people died, injured, displaced, impoverished as a result? If one values power, then one laments the decline of Europe's power. But what if the value system is human-centered, instead of power-based?

When the Great Depression erupted to cripple societies across most of the planet, why was there a sharp turn to a discussion of values, whether by US President Roosevelt who favored a quasi-communitarian orientation that mirrored the New Deal, or ultra-nationalist one that Hitler advocated who was interested in ethnic cleansing as a means of restoring the purity of the mythological Aryan race as Alfred Rosenberg conceived it and the NAZI party practiced it. In a very strange way, the NAZI regime's populist ethnic collectivist approach intended to achieve the same goal as that of FDR and for that matter Josef Stalin who advocated superimposed collectivism.

The Third Reich manufactured a value system that a large percentage of Germans, and Austrians, accepted and lived under with the hope that it would propel them to greatness as the NAZI party defined the concept. Why did millions of people accept an utterly barbaric and inhumane and racist value system under Hitler, and why did they not retain humane principles based on the wider philosophical framework of the Enlightenment that revolutionized European culture in the 18th century? Is it merely a question of brainwashing - no matter how good German propaganda was - or one that a large segment of the population actually embraced values because they perceived benefits accruing to them - everything from keeping their jobs to feeling great that the ruling party told them they were 'superior' to other races.

From the end of World War II that marked the end of Nazi Germany, Fascist Italy and militarist-imperial Japan until the end of the Vietnam War Western and non-Western (Communist regime) societies operated on broader values - in theory and certainly not in practice - of communitarian principles as part of an ideological mix. Certainly in Western societies, led by the US, the value system of individualism, business progress, consumerism, commercialism of culture, and hedonism were prevalent, but the existence of the welfare state entailed tangible evidence that communitarian values mattered. The beginning of the breakdown of that value system comes when the US and the West in general begin to gradually eliminate the communitarian aspect in the societal mix because it interferes with finance capitalism and the neoliberal model of capital accumulation.

More than political trends, material conditions influence evolving value systems, something that is evident in the consumerist values (to which we must add hedonist and atomistic) of much of the world in the last fifty years. After all, values too are class-based. The relative decline of
compassion for humanity, and a rise of alienation which many try to cure by
going to therapy, and with legal and illegal drugs, has been sharply on the increase in the last half century to the degree that we now have a Western culture of therapism thriving.

Ethical ambiguity naturally translates into ambiguity of values, thus reflecting cultural relativism. In a recent public opinion poll, the vast majority of the people in Finland agreed that if their close friend committed murder, they would notify the authorities. In the same poll, the vast majority of Greeks agreed they would not turn in their friend. Not surprisingly, Greek elites, including academics praised the virtue of honoring friendship, while the people of Finland stressed the virtue of social conscience. What accounts for the absence of convergence in the values of the two societies? History, tradition, religion, culture, etc., and what does this example teach us about the values of ambiguity? How could any human being with an once of moral fiber not report a case of murder? How could someone betray their friend, even in case of murder?

Beyond values of ambiguity, there is a much clearer case regarding basic values that are time-tested and transcend time and place.
1. Lying is clearly immoral. Not the kind of lying involving little lies that cause no harm, but big lies that bring about great harm to a great many people. Yet, lying is at the core of both business and politics, but it is passed on as public relations. Lying to an entire nation about the reason for going to war is acceptable, because it is a matter of national security. Lying to consumers about a product is acceptable because it is in the name of peddling a product or service.
2. Stealing is clearly immoral. I was hardly surprised to read stories about people across southern Europe actually stealing food because of the current hard times. However, stealing in the framework of institutionalized 'appropriation' of government subsidies to make banks stronger, is morally acceptable. Yet, this is a process that forces people to steal food. Are we back in the era of Victor Hugo's Jean Val Jean?
3. Killing is clearly immoral. However, mass killings of collateral damage victims in time of war is just fine.Why do human beings categorically reject the individual who kills her husband that abuses her, but accept mass killings in wars? What does this tell us about our values and how they are molded?

How does a politician, a journalist, an academic much less a leading businessperson tell the masses to reexamine their values against the background of austerity economics that benefit those preaching reexamination of values? For more than half a century, the same elites now preaching reexamination of values were advocating consumerism, commercialization of culture, hedonism, atomistic proclivities, all in the name of an open society when in reality the only interest was the thriving of the market economy. Having conditioned citizens as consumers steeped in that frame of mind and value system, how do elites now try to tell them that embracing everything from nature to God, everything from family values to community values filter down and even if it did, what exactly does that do for the high structural unemployment and underemployment, the low wage structure, the lack of opportunities for college graduates, the lack of job security?

When Ronald Reagan was beginning to dismantle the welfare state and strengthen the corporate welfare state, his administration, various think tanks, journalists, academics, clergy and business leaders began to speak of values, namely 'family values'. One odd thing about many of the people advocating 'family values' is that they themselves were not practicing them. Another odd thing was that these values advocates were interested in pushing society in the direction of conformity to the changing status quo, so value discussion was one tool they used.

Of course, there was a contradiction between 'family values' rhetoric, and policies - government and business - that were contributing to undermining the family by forcing both parents to work, in some cases second jobs to make ends meet. At the same time, reorientation to values discussion did not mean that workers must stop shopping, given that the population remained under the spell of increasingly intrusive advertising that helped to shape consumerist and atomistic values. Are we witnessing a Western moral decline or merely a decline of the capitalist system and its apologists trying desperately to distract the masses by shifting the focus to values?

Tuesday, 20 March 2012

In the era of finance capital's hegemony of the corporate welfare
state, it is useful to pinpoint the evolution of how defense spending
has helped strengthen the corporate pyramid while undercutting the
social welfare and corporate corruption has skyrocketed. Defense
spending hovered around $1.4 trillion (of which the US share was roughly half) when Ronald Reagan left office in
1988, dropping to just below $900 billion in the mid-1990s during the
Clinton presidency, and rising to $1.632 trillion in 2010.

All
along, the US has been spending between 40 and 50% of the world on defense, leading as the preeminent military superpower while gradually eroding its productive economic base. This peculiar trend continues at a time that US
economic preeminence is challenged by China and the rest of the BRIC
(Brazil, Russia, India) countries. It is not unusual for an imperial
power whose global economic supremacy declines turns to greater reliance
on defense as a means of leverage both domestically to keep the status
quo and globally to flex its muscle and secure market share.

From
the Roman Empire to the British Empire the phenomenon of declining
economy and rising military spending and activity is a matter of
historical record. There is is something to be said of the logic of defense spending when the civilian economy is in decline, but it is a logic with severe limitations. In the end, decline is inevitable as defense spending
actually hastens the decline of the imperial power, whether it is Rome, Great Britain or US. In the course of this century, the US
will experience a long economic decline, but I predict that it will hold on to its defense sector, just as previous imperial regimes have done. The result will be that the US becomes even more aggressive militarily and tries to secure market
share using its military strength, always with greater economic, political and social costs than benefits.

The end of the Cold War threatened to bring an end to the
policy of 'Military Keynesianism', that is, a policy that the US pursued
from Truman to Reagan, and it seemed to work in the following respects. Military Keynesianism rested on the assumption of allowing defense to absorb the surplus capital from the civilian economy in order to avoid great fluctuations in the economy. That was back in the 1950 when there was a balance of payments surplus instead of massive public sector deficits.

Reagan decided to resurrect 'Military Keynesianism', but he did so engaging in a two-pronged approach: a) cutting massive welfare state programs; and b) borrowing to support defense. The result was that the US won the Cold War. However, unlike early Cold War "Military Keynesianism" when the US kept its middle class society
fairly obedient to the imperial system and its global military and
economic network that kept the US economy strong continued to serve both
the economy and military establishment, by the 1980s the US middle class began to decline and the defense and
diplomatic alliance systems dismantled owing to global realignments arising from new political conditions in Eurasia and East Asia.

The end of the Cold War coinciding with the
emergence of China as the world's next economic superpower, as well as
the policies of regional economic blocs headed by the EU, but also Japan
entailed that Keynesian militarism, pouring the surplus capital into
the defense sector, was obsolete as a policy. This is obviously because
US federal public debt matches annual GDP, and the economy rests on
inordinate borrowing to thrive at current levels.

How has the US justified "Military Keynesianism" in the absence of
the Cold War to its own citizens and to the world? The ‘war on terror’
that has been responsible for absorbing the 'peace dividend'.
Considering that seven of the world's top defense contractors are US,
and considering that the 'defense related contractors' include
everything from Coca Cola to outsourced defense and intelligence
services, the US under both Republican and Democrat administrations has
decided to strengthen the military as a means of keeping the economy
strong. But does this work?

First, defense creates the
least number of jobs, given that it is capital intensive and not labor
intensive. Higher defense spending creates higher unemployment.Second, defense contributes the lowest percentage of any
industry to labor, given that labor costs account for a mere 1.5% of
cost for a typical jet fighter, for example. Third, higher defense spending absorbs capital that would otherwise be devoted to productive enterprises that would in turn create new wealth, as opposed to the parasitic defense sector that merely concentrates capital. Fourth, the level of
corruption in defense-related contracts is much higher than any other,
given that arms trade accounts for 40% of all illegal activities on the
planet. Fifth, defense contractors have a stake in higher defense
spending across the globe, thus they have a stake in conflict creation
and military solutions that keep the defense spending cycle going.Sixth, the war on terror that has been used as a pretext to increase defense spending has caused the skyrocketing public debt and sharply lower living standards and declining middle class. The reason for this is that almost all of the funds to keep the defense sector going has been borrowed. While there is nothing wrong with borrowing if it is intended to create new wealth, defense spending is not in this category. Moreover, when there is heavy borrowing to support the occasional regional war -Iraq and Afghanistan, for example - the pace of the decline hastens along with economic, social and political consequences.

The economic decline of the US is not inevitable, but in order to contain it there must be a radical political change, a shift that entails the political system takes on the defense sector as well as finance capitalism. That is highly unlikely to take place, because politicians depend on businesses for contributions and media exposure in order to be elected to office and survive while in office.

Responsible scholars not on the payroll of think tanks funded by the defense industry or the Pentagon have warned about this phenomenon, but scholars
have zero leverage in politics when compared with defense contractors
and banks. Nor is the issue as some reformers have been arguing cutting
defense here and there by a few percentage points, for such an approach
indicates no will to change directions. The only pressure can come from
people organizing to bring pressure from below for wholesale changes in
the parasitic political economy. Considering the massive influence of
Conservatism and conservative religion in America, the result of
grassroots action will be limited to middle class and working class
urban areas with limited resources and influence.

Given America's current ideological, institutional and political conditions, it is almost certain that it will witness inevitable gradual decline. Major shifts in the social structure are inevitable as the middle class continues to weaken, thus having an impact on the political landscape with a two-party system that in essence represents capital. In short, American democracy is seriously threatened longer term but fairly safe for the near future.

Thursday, 1 March 2012

Of course it is true that IMF-EU style austerity is detrimental to most of the European economies, to the social fabric and to democratic institutions. 'Suicide' entails that austerity will fail to serve the intended purpose, mainly finance capital, and that is something I seriously doubt, given that the entire purpose of austerity is to strengthen finance capital, especially in the core countries. Having said that, austerity is and always have been suicidal in terms of causing irreparable damage to institutions, as many EU countries are now discovering.

The prominent US economist Joseph Stiglitz has decided to call attention to the detrimental impact that austerity is having and will be having on the EU. The problem with the statements of Stiglitz, among other such economists who receive a great deal of money as consultants or external advisers to governments or financial firms, is that they leave a record behind them, a record from which they cannot hide. What they say publicly must be carefully scrutinized, and above all one must always investigate to see who writes their paycheck so they can make statements about economic, monetary and fiscal policy. This is not to say that Stieglitz does not come from a liberal (US-Democrat) ideological background, but he is hardly someone disconnected from governments, private institutions and international financial organizations that made policy decisions detrimental to debtor nations.

Most people probably do not know or do not remember that Stiglitz was an adviser to former Greek Prime Minister George Papandreou who was elected in 2009 and believed that IMF-style austerity was the road to salvation. Other than general social, political and economic weakness, what was the result of the advice that Stiglitz provided to Papandreou? Should society not judge Stiglitz the economic adviser by tangible results of his policy advice, instead of rhetoric?

Some may know that Stiglitz worked for the Clinton administration in the mid-1990s, and the World Bank in the late 1990s and he necessarily had to support pro-private market (neo-liberal) fiscal austerity among debtor nations; poor nations where austerity entailed drop in living standards. After he left the World Bank, he was critical of IMF-style austerity, but he continued to play a role within mainstream institutions and 'respected mainstream economist' who presented himself both as a government insider and a liberal critic.

While theoretically opposing austerity without stimulative measures for economic growth now that he is interested in advocating for a weaker euro and a stronger stimulus for markets, Stiglitz was an advocate of EU supporting the deficit countries so they could make it through their difficult debt problems in the past two years. Having worked at the World Bank, he knew that austerity is a prescription that entailed very deep cuts in social programs, social security and wages, all amounting to the massive decline in living standards for middle class and working people. He also knew that there were genuinely democratic alternatives to austerity, but that would have meant going against the pro-market position that Stiglitz embraces.

When he was advising the Greek government, Stiglitz knew that the advice he was giving was tantamount to reducing the country into an EU (German) economic satellite, that democracy would be compromised, at least as it existed from 1974 to 2009. When working for the World Bank, Stigltiz knew that his policy advice affecting Latin America and Asia was intended to better integrate those markets into the core of the world economic system where capital is concentrated. Stiglitz now knows that 'austerity is suicide', but who can take his vacuous rhetoric seriously when measured against his long record as a pro-market economist who like to play the critic as well?

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